CENTAMIN will produce up to 15% less gold than planned for its 2020 financial year after the company suspended mining activities amid safety concerns at a part of the open pit of its Sukari mine in Egypt.
“Centamin announces that it has detected movement in a localised area of waste material in the Sukari open pit Stage 4 West wall and has decided to immediately defer open pit mining operations in this zone,” the company said in an announcement today.
Awareness of mine safety has become a number one investment priority for the resources sector after two incidents of tailings dam breaches at the iron ore facilities of Vale in Brazil in the last three years. Those events resulted in the tragic death of hundreds of employees and people from nearby communities.
“The safety of our employees is paramount,” said Martin Horgan, CEO of Centamin.
Centamin said fourth quarter production would probably be about 70,000 oz. This compares to previous quarter production of 120,000 oz which took year-to-date output to 375,000 oz. Set against the higher end of production guidance for the year of 525,000 oz, actual output would be about 445,000 oz, a 15% undershoot.
Sales might not be so heavily affected as shortfalls from the open pit suspension would be provided from low grade stockpiles. Underground mining at Sukari was unaffected and would continue as planned, Centamin said.
“It is important to note that the ounces in the impacted area is not lost and has only been deferred,” said Raj Ray, an analyst for BMO Capital Markets in a note. “The company expects to provide an updated mine plan as part of the life-of-asset review by year-end,” he said.
Centamin is due to report its third quarter numbers on October 21.
The company said in its announcement today that measures to stabilise the open pit area were underway, stressing the suspension of production was “preventative”. A geotechnical assessment of the area had been launched.
The area had been scheduled for mining in the fourth quarter and contains about 90,000 oz of gold in in-situ grades of up to 2 gram per ton. Mining of the impacted area would be rescheduled, it said.
Open pit mining in Stage 4 north and Stage 5 north will continue although mining at these portions was at a lower grade of less than a gram per ton.
Since reaching an all-time high in July, shares in the company have weakened nearly 17%. Nonetheless, Centamin is valued at £2.32bn at the time of writing – double the level at which Endeavour Mining sought to buy the company in December.
